US economy stalls as BOJ holds fire

AUD / USD

Expected Range: 0.7570 - 0.7660

Doing well to recover from Wednesday’s CPI print which showed the Consumer Price Index had slumped to its lowest point since 1999, the Australian dollar recovered from lows of 0.7571 when valued against its US Counterpart. Fighting its way to an eventual high of 0.7659 the biggest event across forex markets yesterday came after the Bank of Japan surprised market participants by keeping monetary settings unchanged, a decision which sent global stocks broadly lower and the Yen higher. With the US dollar in a somewhat neutralised position for the time being investors will look towards to the RBA next Tuesday a decision which could well provide the next bout of volatility. This morning the Australian dollar opens 0.5 percent stronger at a rate of 0.7624.

NZD / USD

Expected Range: 0.6910 - 0.7020

Whilst keeping the official benchmark cash rate unchanged at 2.25 percent yesterday, RBNZ Governor Graham Wheeler said in Wellington on Thursday that the central bank may need to cut interest rates further in the future as sluggish economic growth and a higher currency stoke inflationary pressures. In a window dominated by Central Bank rhetoric, it’s been the lack of stimulus from other key players over the past 24 hours which has propelled the New Zealand dollar forward. Gaining significant ground when valued against its US Counterpart the Kiwi reached an eventual high of 0.6989 opening stronger this morning at a rate of 0.6957.

GBP / AUD

Expected Range: 1.9090 - 1.9200

The Great British Pound has advanced when valued against its US Counterpart over the past 24 hours, with disappointing growth indicators from the United States trimming the Greenbacks recent recovery. In the wake of a relatively quiet session across European markets, the Sterling managed to pick up 0.4 percent worth of gains, opening stronger this morning at a rate of 1.4602. On track to round out a broadly positive week, economic indicators over the past five days have in the most part matched expectations. With near-term topside resistance now clearly visible at 1.4610 a weekly close above this level could enhance momentum up towards the 1.4650 area. Whilst stronger against the Greenback the Sterling opens lower versus both the New Zealand dollar (2.0956) and the Australian dollar (1.9142).

USD, EUR, JPY

Japanese Stocks were hit hard yesterday with the Nikkei losing in excess of 3 percent after the Bank of Japan shocked the market by capping additional monetary stimulus for the month ahead. Choosing instead to wait and see what the broader implications of negative interest rates would be, the Japanese Yen soared against the dollar and the euro, notching up some of its largest gains in close to six years. Whilst the door remains well and truly open for additional stimulus the market’s reaction to the underlying “hold” decision was abrupt, explaining the huge jump in liquidity. With the JPY stronger versus the Greenback this morning (108.074), keeping the US dollar well and truly under wraps, figures overnight showed gross domestic product increased by a mere 0.5 percent during the first quarter of 2016, its slowest pace of expansion since the first quarter of 2014. On the outlook this evening investors will have to digest only second tier data prints from the world’s largest economy with data on personal spending, consumer sentiment and employment costs all on the agenda.